UK pensions dept hands Softcat £250M for Microsoft subscriptions

Deal done as UK.gov negotiates new £12 billion framework

The UK’s Department for Work and Pensions has awarded reseller Softcat a contract worth £249.7 million ($310 million) for a variety of Microsoft software.

Announced earlier this week, the contract is set to provide a licensing subscription service for Microsoft, or equivalent, products and incorporates a number of product suites used by the DWP, including Office 365, Windows and Server products.

The five-year deal is set to come to an end on 31 March 2028. It is a call-off from a framework agreement designed to drive up volume with selected suppliers in return for greater value for money for the public purse.

It was let by the Crown Commercial Service, the procurement wing of the Cabinet Office, under the reference number RM6068 for the provision of Technology Products and Associated Services. The framework agreement was valued at up to £6.5 billion ($8.09 billion) over four years when the contract was launched in 2019.

The period within which public sector buyers can contract under the framework ends in December 2023. The government has already begun the procurement for Technology Products and Associated Services 2, a framework set to be dubbed RM6098, which could be worth up to £12 billion ($14.9 billion), according to a contract notice published in March.

The DWP came under fire in May of last year when Rishi Sunak — finance minister at the time — blamed legacy IT for his decision not to increase social security payments as inflation hit the highest rate in 30 years.

According to reports, the Conservative politician who became prime minister last autumn was prevented from raising some benefits because of ageing back office systems at the Whitehall department, which has overall responsibility for social security. A government source said: "The system was simply not built to be flexible."

In January 2022, MPs told the DWP it should factor in the cost of not upgrading a 34-year-old legacy system when reviewing tech investments. The damning conclusion followed a National Audit Office report which found that a legacy ICL-era mainframe was one of the causes behind the failure to pay more than £1bn in state pensions. ®